Getting a High-Risk Travel Merchant Account
Starting a travel business can be both exciting and challenging at the same time. It is exciting because you get to meet different people from all different cultures and help them create unforgettable experiences. However, getting approved for a proper high-risk travel merchant account can be a time-consuming process. Take your time & choose your high-risk payment provider wisely.
The travel industry is not a “by the book” industry. It demands plenty of creativity and can be very competitive.
To own a successful business, you need to stay on top of the latest trends and always find new ways to reach clients. You also need to have a high-risk travel merchant account to receive payments for your services.
But what do you do when banks and payment processors consider your travel business unsafe and do not want to offer you any way of accepting payments?
It means finding a trustworthy payment processor capable of handling the difficulties associated with a high-risk travel merchant account.
Finding a merchant services company that can get you approved with a merchant account even with the risks involved is not an easy task. Practice patience and do your research before making the first decision.
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When Your Travel Business is High Risk – What Do You Do?
Travel businesses are not the only ones that have to deal with excessive chargebacks, fraud, and bad credit history.
Firearms, health and wellness products, real estate, antiques, electronics, credit repair, SEO services, and electronic cigarettes also fall into this category.
The way to get a high-risk merchant account for your business starts with finding a knowledgeable, high-risk merchant account provider with experience in the travel industry.
These qualified, high-risk account providers are experts when it comes to working with travel companies & tour operators considered unsafe by financial institutions. They are the go-to solution and know what is required to set up merchant accounts.
Reasons for High Risk in the Travel Industry
The travel sector is the largest service industry in the world. Every year, the industry has an enormous impact on the global economy because of the trillions of dollars it brings in revenue and the millions of people who have opportunities to work in the sector.
But even as the travel industry continues to grow in leaps and bounds, many businesses operating in the sector find it hard to run their operations smoothly. This situation makes acquiring banks and other financial institutions uncomfortable about doing business with travel companies.
But why are these institutions not keen about working with the travel sector when it is so profitable?
For starters, credit card fraud in the travel industry has one of the highest rates in the world. And many travel companies do not deal with this menace well enough.
When credit card fraud is committed, the owner of the card hardly pays the price. Oftentimes, it is the travel merchant that pays the price, once it is discovered the card was used illegally.
Banks, credit card processors, and other financial institutions usually side with issuing banks and cardholders over disputes. These institutions often show little sympathy for these travel agencies with high chargeback ratios.
High-Risk Travel Merchant Accounts and Fraud
Most fraudsters target small travel companies because they know these businesses lack proper fraud prevention tools or strict screening procedures to uncover their criminal activities.
That is why it is easy for these fraudsters to get unsuspecting travel agents to authorize transactions from stolen credit cards.
Many travel businesses make the mistake of not confirming the identities of cardholders before going ahead with transactions.
Another reason why opening a high-risk merchant account is far from being a simple process is the bad reputation of the travel industry when it comes to chargebacks and cancelations.
High ticket merchant account cancelations and excessive chargeback ratios make it tricky for financial institutions to work with travel merchants too.
When a customer disputes a purchase, the credit card company usually reverses the charge by debiting the merchant’s account.
Under the Fair Credit Billing Act, people can challenge goods and services they did not accept or were not delivered as agreed.
For example, an IT consultant can call off his flight from Los Angeles to New York even if it was booked months ahead. If he is not satisfied with the response of the airline agent, he can call his credit card company to reverse the payment.
Chargebacks and cancelations are bad for business. Even when the money is reversed, travel merchants can still be charged a fee by the issuer and face stiffer penalties and additional fines.
It is just too much for banks to deal with and most of them prefer to avoid this type of scenario altogether.
Travel has the highest chargeback rate in the country, with almost twice the average of other leading sectors.
But despite these setbacks, you still have to find a way to open a merchant account for your high-risk business.
What is a High-Risk Merchant Account?
A high-risk merchant account provides payment processing solutions to businesses that are deemed high-risk by banks and other financial institutions.
These businesses can include those that engage in high-risk activities such as selling alcohol, tobacco, payment processing for firearms sales, and pharmaceuticals or those with a history of high chargebacks and disputes.
The processing fees for high-risk merchants will be higher than for lower-risk merchants because of the additional risk involved.
High-risk merchant services providers may also carry additional liability insurance to protect themselves from fraud, chargebacks, and other issues.
What is a Travel Merchant Account?
Travel merchant accounts are special accounts designed for businesses that sell airline tickets and vacation packages. They are usually offered to online travel agencies by some providers.
In addition to the standard features of a merchant account, such as charging fees and offering security, high-risk merchant account travel services often have additional features designed to meet the needs of the travel industry.
For example, merchant account travel services may allow businesses to accept a wider range of payment types, such as credit cards, debit cards, e-checks, and even crypto transactions.
They may also include features such as automated booking and inventory tracking.
High-risk travel merchant accounts usually have less stringent rules about storing information about their customers and can ship products more quickly due to their streamlined procedures.
Can Payment Aggregators Provide Credit Card Processing Services to Travel Merchants?
Card-not-present transactions are considered high-risk and often subject to elevated fees, especially if processed through a manual review process.
As a result, some aggregators may be reluctant to provide payment processing services to travel merchants.
Aggregators that offer credit card processing services will likely charge higher rates or additional fees to offset the risk of chargebacks, fraud, and other issues that can arise with these types of sales.
Why are Travel Agencies and Other Travel Related Merchant Accounts Considered High-Risk?
There are high risks associated with booking a flight or vacation in the travel industry. For example, a customer may not show up for their flight or may not have the funds available to pay for their trip. Sometimes they simply change their mind and attempt to get transactions reversed.
This is one of the main reasons why travel agencies and other travel merchants are considered high risk. There are also many additional reasons why chargebacks could happen in this industry.
In many cases, consumers might open an account with a travel merchant and then the customer will purchase a ticket to travel somewhere. However, when it comes time to pay for the trip, customers may not have enough funds to complete their travel plans.
These high-risk travel merchant accounts can be defined as any travel-related business receiving a higher rate of chargebacks, fraud, or disputes than normal. Several factors may make a merchant account high risk, including:
- The type of travel business they specialize in
- Whether or not they accept payments online
- The way they accept payments for deposits – Are they refundable?
- How they handle customer disputes
- Procedures used to verify their customer’s identities (e.g., do they have strong authentication protocols?)
- Whether they have a history of chargebacks/disputes/fraud in their business
While some changes can help to reduce the risk level, it is almost always best to select a payment provider that understands the travel industry and risks.
Advantages of Opening a High-Risk Travel Merchant Account
There are many benefits to why you should use a specialist provider to process your high-risk travel merchant account application.
They include:
- Chargeback prevention: High-risk companies provide tools that minimize chargebacks and also respond quickly with solutions when incidents occur.
- Extended coverage: Access to larger markets by accepting payments in multiple currencies.
- More profits: A high-risk travel account offers a better opportunity to scale up your business than a low-risk merchant account.
- More options: An eCheck merchant account for high risk business allows for the accepting eChecks and ACH payments when credit cards are declined.
A proper high-risk travel merchant account gives you the option of running your business from a physical location or taking it to the web.
With this type of account, travel businesses get to handle traditional and online credit and debit card processing alongside high-risk eCheck and ACH payments as well.
Choosing a Payment Gateway & Virtual Terminal for Your Travel Business
As a travel agency, it is a big advantage for your business to be online. The payment gateway makes it easy to handle online payments automatically. Customers can pay directly on your website without having to be redirected elsewhere.
A secure gateway for high-risk business types connected to your website gives you leverage to operate around the clock, accepting payments 24/7 and in multiple currencies if you choose so.
When it comes to making a success out of any online business, the payment process must always be a simple one. It has to be straightforward and must also deliver a quick end result.
If a customer has to jump through hoops to navigate your website, they will find it difficult to return, even if you offer discounts and friendly prices.
Last words
When choosing your high-risk merchant account provider, do not forget to consider the additional fees you will need to pay for accepting payments online.
Setup fees, inflated transaction costs, and higher ongoing monthly maintenance fees are common. Ask questions about hidden charges so that you are not taken by surprise.
It is not always up to a merchant processor or merchant underwriter to decide if a lower percentage rate, higher transaction fee, or additional monthly fees is the best option for your startup travel business. The sponsoring banks usually have a say in this and these decisions are made jointly.
High-risk merchant account underwriters will ask for rolling reserves on newer business types. Credit scores and bank statements are always checked in advance before making decisions on approvals for processing volumes.
Please contact one of our seasoned professionals at 800-419-1772 should you have any additional questions pertaining to your travel-related business. Our representatives are readily available and here to help you succeed in your business venture.
